A comprehensive approach to the analysis of cash flows under the conditions of high uncertainty

Keywords: solvency, cash flows, instability, risks

Abstract

Subject. The article examines the issues of analytical support related to the management of cash flows within organisations. The authors consider methods of cash flows analysis and monitoring which allow for their comprehensive assessment and are advantageous under the conditions of high uncertainty of the external environment. It is very important to justify the selection of indicators used to manage cash flows, to develop methodology for their calculation, and to create a system of indicators required for analysis, monitoring, and forecasting since different estimated figures bring about different analysis results and managerial decisions.
Objectives. To study possibilities of developing analytical support for cash flow management under the conditions of high instability of the external environment.
Methodology. The research involved using methods of comparative, logical, financial, and linguistic analysis. The main objects of comparative analysis were indicators of cash flow from operations, free cash flow, net working capital, net debt, and their ratios. The study used data from accounting and financial statements, the SPARK reference and analytical system, disclosures and presentations for investors presented on the websites of Russian companies. These data were used to conduct a comparative analysis of approaches to determining key financial indicators characterising cash flows within commercial organisations.
Results. The results of the study allowed making recommendations aimed at developing an integrated approach to providing analytical support for cash flow management in order to increase the validity of decisions. It was concluded that cash flow management requires cross-functional interaction with due account of the relationship between operational decisions and their financial consequences. This will allow controlling the main processes that affect the volume and dynamics of cash flows and developing key performance indicators necessary for their monitoring and forecasting. In order to monitor the developed initiatives, it was recommended to use a dashboard of key indicators that comprehensively reflect the process of creating and using funds.
Conclusions. The conclusions and recommendations can be used to develop a comprehensive model for solvency management within the organisation under the conditions of high instability of the external environment, which will increase the validity of decisions.

Metrics

Metrics Loading ...

Author Biography

Olga V. Efimova, Financial University under the Government of the Russian Federation

Dr. Sci. (Econ.), Prof., professor of Business Analysis Department of Financial

References

Endovitskiy, D. A. (2014) Analysis of the investment attractiveness of the organization: scientific publication. Moscow: Knorus publ. (In Russian)

Efimova, O. V. (2020) [Formation of information on cash flows in order to make investment decisions]. Vestnik Voronezhskogo gosudarstvennogo universiteta. Seriya: Ekonomika i upravlenie = Bulletin of the Voronezh State University. Series: Economics and Management. 2, 116–130. (In Russian)

Kogdenko, V. G. (2017) [Methods of financial modeling based on published consolidated financial statements]. Ekonomicheskij analiz: teoriya i praktika Economic analysis: theory and practice. 16(7), 1269–1285. (In Russian)

Korobeynikova, L. S. & Shurygin V. N. (2020) [Comparative review of methodological approaches to the analysis of cash flows as a tool for ensuring financial security]. In: Proceedings of the International Scientific Anniversary Conference "The Faculty of Economics of the Voronezh State University is 90 years old". Edited by D. A. Endovitsky, N. G. Sapozhnikova. Voronezh State University. pp. 70–73. (In Russian).

Savelyeva, M. Yu., Alekseev, M. A. & Dudin, S. A. (2018) [The testing of preparation quality of cash flow statement preparation in Russian companies]. International Accounting. 21(9), 1024–1036. (In Russian).

Akten, M., Giordano M. & Scheiffele M. (2009) Just-in-time budgeting for a volatile economy. McKinsey on Finance. 31, 6–10.

Allen, F., & Carletti, E. (2010). An overview of the crisis: Causes, consequences, and solutions. International Review of Finance. 10(1), 1–26.

Batuman, B., Yildiz, Y. & Karan, M. B. (2021) The impact of the global financial crisis on corporate cash holdings: Evidence from Eastern European countries. Borsa Istanbul Review. 22(4), 678–687. DOI: 10.1016/J.BIR.2021.10.002

Becker, S. et al. (2016) Budgeting in Times of Economic Crisis. Contemporary Accounting Research. 4(33),. 1489–1517. DOI: 10.1111/1911-3846.12222

Bezemer, D. J. (2010) Understanding financial crisis through accounting models. Accounting, Organizations and Society. 35(7), 676–688.

Damodaran, A. (2020).Going to Pieces: Valuing Users, Subscribers and Customers. SSRN Electronic Journal.

Efimova, O. & Rozhnova, O. (2021) COVID-19: Financial impact and disclosure. Lecture Notes in Networks and Systems. 186, 205–213. DOI: 10.1007/978-3-030-66093-2_20

Fawzia, N. S., Kamaluddina, A. & Sanusib, Z. M.(2015) Monitoring Distressed Companies through Cash Flow Analysis. Procedia Economics and Finance. 28, 136–144. DOI: 10.24891/ea.16.7.1269

Ionescu, A–M. & Neghina, R–A. (2021) Management of Cash Flows during Covid-19. Journal of Eastern Europe Research in Business and Economics. Article number 870762. DOI: 10.5171/2021.870762.

Karzaeva, N. N. & Karzaeva, E. A. (2019) Methods for assessing solvency in the financial diagnostics system of an economic entity. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Paper ID: 10A19I.

Khan, S. U. (2022). Financing constraints and firm-level responses to the COVID-19 pandemic: International evidence. Research in international business and finance. 59, 101545. DOI: 10.1016/j.ribaf.2021.101545

Konstantinova, S. (2015) Analysis and modeling of industrial companies` cash flows under crisis conditions. Trakia Journal of Sciences. 13(1), 306–311.

Larionov, A. V. (2021) Methodological approach to the organization of monitoring of cash flow volatility. Finance: Theory and Practice. 25(3), 150–158. DOI: 10.26794/2587-5671-2021-25-3-150-158.

Mirza, N. et al.. (2020) Impact of Covid-19 on Corporate Solvency and Possible Policy Responses in the EU. The Quarterly Review of Economics and Finance. DOI: 10.1016/j.qref.2020.09.002

Soboleva, Y. P. et al. (2018) Monitoring of Businesses Operations with Cash Flow Analysis. International Journal of Civil Engineering and Technology (IJCIET). 9(11), 2034–2044.

Ritter, T. & Pedersen, C. L. (2020). Assessing Coronavirus’s Impact on Your Business Model. Harvard Business Review. April.

Published
2022-09-30
How to Cite
Efimova, O. V. (2022). A comprehensive approach to the analysis of cash flows under the conditions of high uncertainty. Proceedings of Voronezh State University. Series: Economics and Management, (3), 5-18. https://doi.org/10.17308/econ.2022.3/9985
Section
Accounting, statistics